I asked my dad, who is retired, how today's stock market downturn affected his "piles of gold". Everyone is in differing financial situations, but his response is a voice of steadiness and offers insight that I believe is applicable to many. Below is a portion of his email response:
"...One lesson to remember is that the market responds to psychology as much as to economic forces. And drastic falls, like today, will give way to sudden surges and no one can predict those days. So, if it doesn't drive you crazy, you stay invested with the confidence that in the long run you will do better than anything else you could do with your money. It may take years, but it will be worth the wait.
"Here is one thing you will see: in the next few months there will be advertisements about programs, funds, or books that will show fantastic returns while our investments have tanked. But you won't hear from these same people a few years from now. There is no magic formula and no one knows what the market will do, much less when it will do it.
"Here is what Fisher says:
"'These are extraordinary times but they won't last forever. Now more than ever we urge you to exercise continued patience. Living through abnormally high volatility can be very uncomfortable, but now is a treacherous time to attempt to stem the temporary discomfort by abruptly selling out."
"The only time the piles of gold are affected is when you sell. Just because it is less on paper will only bother you if you let it. Marianne's grandpa had investments he bought in the 1920s when he was a 'prominent man' in the Kettle Valley Railway. He lost his job (because Canadian Pacific bought the little railroad) and they moved to California. But he did not sell when the market fell apart nor during the Great Depression. By the time Marianne came along he was a wealthy man again. It took over 10 years, but those who sold in panic or jumped out of windows were worse off than he."
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